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Chevron to Pay $1.7 Million to Resolve Allegations Over Reimbursement Claims for Gas Station Cleanup

Violations of False Claims Act Allegedly Occurred Across the Commonwealth

BOSTON – Chevron USA, Inc. and Texaco Downstream Properties, Inc. will pay $1.7 million to resolve allegations they received reimbursement payments from a state fund for gas station cleanup projects even though Chevron and Texaco sought and received payments from their insurers, Attorney General Martha Coakley announced today. These false claims allegedly involved service stations across the Commonwealth.

The Massachusetts Underground Storage Tank Petroleum Product Cleanup Fund program (UST Fund) was established to expedite the cleanup of environmentally dangerous leaks from underground storage tanks, such as those commonly found at gasoline stations, by reimbursing owners and operators for eligible expenses incurred in their response. To fund the program, the Commonwealth charges tank registration and delivery fees.

According to the UST Fund’s regulations, claimants must disclose if they sought reimbursement from another source including insurance for expenses they submit to the UST Fund. If claimants do recover money from both insurance and the fund for the same expenses, they must pay back the UST Fund.

“While the UST Fund program continues to be a great resource for our environment, it requires honesty from its participants in order to be effective and efficient,” AG Coakley said. “We will continue our efforts to determine whether some oil companies may have sought or recovered money from their insurers without proper disclosure or reimbursement.”

In 2001, Chevron and Texaco merged to create ChevronTexaco (now Chevron Corporation). This settlement resolves the alleged failure of each company before the merger – and Chevron after the merger – to disclose to the UST Fund that they had certain insurance policies and that Chevron and Texaco each received payments from their respective insurers through policy buy-backs and/or settlements of their claims.

The settlement with the Attorney General’s Office requires payment of $825,000 to the Commonwealth’s UST Program Expendable Trust and $875,000 to the Commonwealth’s General Fund. Chevron cooperated fully with the Attorney General’s investigation.

The AG’s Office will continue its ongoing investigation into whether certain other oil companies submit false statements to the UST Fund or obtain reimbursements for which they did not qualify. On April 9, 2012, AG Coakley announced a $2.2 million settlement with Sunoco involving the company’s claims to the UST Fund. On April 13, 2012, AG Coakley sued Hess Corporation alleging falsely claimed reimbursements from the UST Fund.

This case was handled by Assistant Attorneys General Alex Klibaner and Matthew Gendron, along with Deputy Division Chief Monica Brookman, all from AG Coakley’s Insurance and Financial Services Division.